Interest Deduction

[S T]

I believe I know the answer as "no",but wondered if there were any other opinions.

Taxpayer needed to send his 17 year old to a
"Therapeutic School" for ADHD - eating disorder, etc in 2012. The medical insurance paid 50% under a Mental health Benefit.

I do not believe there is an issue for the balance that the T/p had to pay out of pocket for medical expenses.

Question - The cost was a very large amount, T/p applied for a loan for "thereapeutic education" and the loan was not recorded against the personal residence, similar to a "Student Loan" but does not seem to meet the qualifications for that.

It appears then the loan will not qualify for a mortgage interest deduction, but was wondering if there was any other deduction for the interest paid as it was a "medical loan".

In 2013, t/p refinanced the primary residence and paid off the loan, so for 2013 there should be a deduction, but 2012??
Thanks,

Sandy

[taxea]

Why wouldn't you have a medical deduction for the loan and the interest paid on it allocated from the total mortgage interest?

[ChEAr$]

Why wouldn't you have a medical deduction for the loan and the interest paid on it allocated from the total mortgage interest?

Yes, a deduction for the medical expense paid. The fact he got a loan with interest is immaterial. Interest is personal in nature.

[S T]

Seems prior post did not read my post, or I was "lame" and did not post properly.

Thanks Chear$ - I didn't believe the interest was deductible as it was not recorded against the primary residence to qualify for Equity Loan or Mortgage Interest Deduction, it was a separate loan (which seems to be personal interest)

The amount for the Care amount , possibly could/can be a medical deduction, as their Health Care coverage paid 50% and was substantiated.

Sandy

[Gretel]

I concur with Harlan. I made the mistake with one of my clients some years back and took the interest as deduction but later researched and found out that any loans for medical reasons are personal loans.

[Roland Slugg]

I believe the issue here is whether the interest can be deducted. The interest on any qualifying home equity (HE) loan is deductible, within certain limits, regardless of what the funds were used to pay. However, one of the requirements of a HE loan, in order for its interest to be deductible, is that it must be secured by the taxpayer's main or second "qualifying" residence. If that was not done in your client's case ... i.e. the loan was unsecured ... then the interest paid thereon is personal interest and not deductible. See Code §163(h)(3)(C).